Startups in the Indian creator economy are struggling to stay afloat, owing to the inability of Startups to find a product-market fit, despite the fact that hundreds of thousands of influencers and digital producers flourish on social media platforms.

Several Startups in this field that have garnered more than $12 million in capital have shut down, while many other Startups have pivoted or been bought in distressed sales during the earlier 12-18 months, according to industry officials.

In 2020-2021, a slew of these businesses sprang out, the maximum of that provided tools to let digital producers directly monetize their material.

PenCircle, a fan patronage startup, has ceased operations, according to cofounder Jayan Nair.

According to reports, Nithin Kamath-backed community monetisation tool StreamAnchor is “operationally inactive”.

Qorner, a financial platform for digital entrepreneurs, posted on Instagram for the last time in April 2022. It seems in Titan Capital’s portfolio, however, dual clicking on the startup reveals that its website no longer exists.

Pixel Cards, a credit card for creators, even went out of business, citing revisions in the Reserve Bank of India‘s prepaid payment instruments laws. They shifted due to a difficult regulatory climate, according to cofounder Aditya Kulkarni’s LinkedIn page.

Scenes, a community management platform, was bought last week in an all-cash acquisition by Unacademy’s Graphy, which provides tools for producers to build and administer courses.

According to insiders, scenes were sold to Unacademy in between expanded competition and a difficult financial climate.

Protonn, a Matrix Partners-backed startup that provided freelancers with audience management and monetization tools, shut down six months after raising $9 million.

According to reports, Lightspeed-backed Frontrow, which received $18 million from investors for presenting celebrity courses, is reportedly trying to be secured or may shut operations.

Kiko, an influencer-led video-shopping app, transitioned from a live-commerce platform to a B2B platform supporting local retailers last year.

Trell, an influencer-led marketplace that has made significant investments in teaching influencers and paid them a minimal wage, had not cleared creator dues as of June 2022.

During the pandemic, India saw a significant rise in the number of new digital producers, leading to the emergence of several TikTok alternatives once the app was banned here.

Startups quickly arose to serve these producers, providing solutions like selling online courses and premium content, patronage sites, and community and payment management systems. But everything quickly began to fall apart.

Why? For one thing, most of these startups, according to experts, focused on administrative concerns rather than difficult problems confronting content creators. In addition, prominent platforms like Instagram pushed out creator-centric features like permitting retail integration and subscribing to a creator’s postings, rendering some community monetisation startups obsolete.

According to Raj Kunkolienkar, founder of online business education institution Stoa, these startups did not solve any tough difficulties for content providers. According to him, the actual challenge for a creative is gaining distribution, establishing an audience, and keeping them interested. And there are no simple technological answers to these issues.

Kunkolienkar is speaking from personal experience; in 2020, he briefly dabbled with a creator economy  startup . Back then, the creative economy startup environment was like a fever dream, he remarked.

According to Viraj Sheth, cofounder of talent management and influencer marketing firm Monk Entertainment, there is a flow of startups offering to develop a ‘Khatabook‘ for creators. What they didn’t comprehend was that a creator would only receive 15 invoices monthly. Why would they pay Rs 2,000 monthly for invoice management?

Sheth underlined that creators don’t need help with administrative tasks. Even if a creative earns a couple of lakhs every month, they’ll discover these tools and wonder whether there’s a free version. Instead, they require assistance with concerns relating to their mental health and writer’s block.

However, several venture-backed firms focusing on monetizing The creator economy are still hopeful. about their prospects.

9Unicorn-backed Cosmofeed, which raised $1.5 million in March 2022, Accel-backed Rigi, which funded $12.3 million in January, and Y-combinator-backed Qoohoo are among them.

According to industry experts, their business strategy of receiving a fee from artists may be their biggest obstacle.

Although creators respect these services, an employee of one of these platforms stated that they are hesitant to pay even a 10% commission (the market standard in 2021) to these platforms.

Not to mention that many inventors already contribute a tiny portion of their revenues to talent management companies.

According to Rigi cofounder Swapnil Saurav, the firm takes a 10% default cut unless the request is outbound to a creator, in which case the creator negotiates.

Rival startups approach authors with lower percentage cuts, eventually compelling you to lower your price, Saurav noted, comparing this to the traditional Amazon vs Flipkart pricing struggle.

Initially, Qoohoo allowed producers to keep 100% of their revenues. However, it changed its model in 2021. Maintaining larger profit margins is tough, according to Qoohoo cofounder Vimal Rathore. 

He stated that the corporation is reducing spending and performing trials in order to widen its influence across different locations and categories.

According to sources, creator economy startups are even finding it difficult to exist globally.

As industry participants have continuously said, only 5% of all the creators in India generate about 90% of the money.

Indians like consuming material, but their willingness to pay for more and unique content is brittle.

Over the earlier 2-3 years, subscription income in media publications & streaming platforms has grown at a steadier rate.

As a result, most producers rely on brand partnerships to monetize their audience rather than expecting that people will subscribe to their material or pay for their cohort-based courses in droves.

Perhaps the current generation of active and forthcoming entrepreneurs in this field would do good to keep that in mind, specifically as they usher in the next phase of creator economy startups reliant on AI.

Conclusion.

Several businesses in this field that have garnered more than $12 million in capital have shut down, while many others have pivoted or been bought in distressed sales in the earlier 12-18 months, according to industry officials.